In The Courts

Wal-Mart Execs' Testimony Could Help Sex Bias Suit

By Liza Featherstone

WeNews correspondent

Thursday, May 1, 2003

The sex bias claims by a group of Wal-Mart employees may be strengthened by recent pre-trial testimony of Wal-Mart executives. Meanwhile, the group awaits a decision whether their case will become the largest civil rights class action in history.

(WOMENSENEWS)--Female plaintiffs in a major sex-discrimination class-action against Wal-Mart filed for class certification on Monday, before a San Francisco federal judge.

Depending on the outcome of a class certification hearing this summer, which will decide how many women can be included in the case, the suit could become the largest civil-rights class action in history. If the plaintiffs have their way, the class will include over 1.5 million women.

One of the plaintiffs' lead lawyers, Joseph Sellers of Cohen, Milstein, Hausfeld and Toll, a law firm with offices in New York, Washington, D.C. and Seattle, says the pretrial testimony undercuts Wal-Mart's defense that the reports of sex discrimination were isolated incidents by renegade managers. Sellers says that the statements made under oath by Wal-Mart executives indicate that people running Wal-Mart have been aware of the company's "failure to promote women and they've done nothing about it." He adds the statements also show that sexism is a part of Wal-Mart's corporate culture, even "at the very highest levels."

The lawsuit, Dukes v. Wal-Mart, is named for lead plaintiff Betty Dukes, a 52-year-old African American woman who still works at Wal-Mart in Pittsburg, Calif. In the case, seven current and former employees are charging the nation's largest employer with discrimination in promotions, pay, training and hiring. A majority of the company's workers are women, but women fill only one-third of its management positions. The current plaintiffs, all of whom are from California, are supported by more than 100 detailed statements from women who worked in Wal-Mart stores in 30 states. Many women say Wal-Mart supervisors told them that men were paid more because they had families to support.

Thomas Coughlin, chief executive officer of Wal-Mart Stores Inc. based in Bentonville, Ark., has also given testimony in the case. Questioned about diversity goals Wal-Mart sets for itself, Coughlin testified that he did not know what they were or whether the company was meeting them.

In speeches to company managers, Coughlin has stressed the importance of winning the customer's trust. Plaintiffs' lawyer Joseph Sellers showed Coughlin handwritten notes for such a speech, in which, according to Sellers, Coughlin had written that customers should feel as if they could trust Wal-Mart employees with "their wife and their wallet." Coughlin admitted those notes were his and that he gave this speech frequently. Sellers told Women's eNews he found Coughlin's use of the term "wife" revealing, as it suggested that he assumed he was speaking to a predominantly male group and because "it sure came across that you were trusting them with your chattel, your property."

Personnel Chief Disavows Diversity Memos

Coleman Peterson, executive vice president of Wal-Mart's "people division," as the company refers to its human resources department, has worked for the company since 1994. According to internal company memos obtained by the plaintiffs' lawyers, Peterson has, during his tenure, repeatedly let his Wal-Mart colleagues know that women are underrepresented in company management and offered suggestions on remedying the problem, including hiring a point-person to oversee diversity initiatives.

In one memo, Peterson complained that Wal-Mart did not hold managers accountable for promoting more women and minority men. Under questioning from Sellers, Peterson distanced himself from the implied criticism in his statement, attributing it to a general spirit of perfectionism at the company. At Wal-Mart, he said, whatever the topic of conversation, the message sent by leadership is that "we can always do better." Pressed further, he said, "Part of my responsibility is to get everybody's attention."

Sellers, referring to the statement in the memo, asked, "Well, was it a lie? Were you writing something that wasn't true?" Peterson answered, "Yes, I was."

Minutes of Wal-Mart board meetings, provided to plaintiffs' lawyers, record that Peterson, on several occasions, reminded his colleagues that the company lagged far behind its competitors in representation of women in management. He pointed out that, for example, Target, a competing retailer based in Minneapolis, 52 percent of managers are women. According to economist Marc Bendick, an expert witness hired by the plantiffs, 34 percent of the managers in Wal-Mart stores are women, while the company's major competitors boast 56.5 percent female management. Bendick, a partner in the private firm Bendick and Egan Economic Consultants, has analyzed employment data in more than 100 employment discrimination cases and has testified for both employees and companies.

In April, Wal-Mart released competing analyses by its own experts, disputing those interpretations of its work-force statistics, maintaining, among other points, that women are promoted at Wal-Mart "at a rate that exceeds their rate of applying . . . for those promotions."

In the case, Wal-Mart has consistently argued in that competitors' numbers only look better because they count department managers, or supervisors who are paid by the hour, as managers, while Wal-Mart counts only salaried supervisors. Salaried managers earn significantly more money. A woman working as an hourly department manager, for instance, makes on average $21,709 a year, while as an assistant manager--the lowest level of salaried management--she'd average $37,322. Salaried managers are also given much more responsibility.

The majority of hourly supervisors are women, as are the majority of other hourly workers at Wal-Mart. Peterson claimed that when he raised the issue of female representation at meetings and cited other company's statistics, he always added this disclaimer about the hourly managers, but he was unable to explain why that disclaimer never appeared in the meetings' minutes.

While Peterson repeatedly asserted that other large retailers count hourly supervisors as management, he was able to provide only a single example of a company that did this.

Erratic Job Postings, Meetings at Strip Clubs

The plaintiffs have also cited Wal-Mart's lack of systematic job posting as a barrier to women's advancement. Human resources experts agree that posting notices announcing open positions in places where employees can see them--break rooms, for example--tends to undermine favoritism and prejudice while promoting more fairness in a workplace.

Peterson admits that posting salaried job openings leads to greater equality of opportunity, but also acknowledged that Wal-Mart doesn't enforce it in any systematic way. Asked about individual store managers' decisions not to post particular positions, he said "Frankly, it's not something I would look at or review." Nor, he added, would any of his staff in the "people division" monitor this.

Some female managers have testified that business meetings with their male Wal-Mart colleagues have been held in strip clubs and Hooters restaurants, an Atlanta-based chain, in which the customers, 70 percent of whom are male, are waited on by attractive and scantily clad "Hooters Girls." (The motto on the company's Web site is "Men have different faces so you can tell them apart.") Coleman Peterson felt that strip club get-togethers on company time were not "something Wal-Mart culture would support and believe is okay."

Asked about business meetings at Hooters, however, he reserved judgment. "It is conceivable in some small town that Hooters is kind of like the restaurant du jour, okay," he said, "and that it is viewed as one of the most elegant and really one of the best places to meet and eat."

Wal-Mart has long required that employees be willing to relocate when promoted into management, a rule that has, according to plaintiffs, been a major barrier to women's advancement in the company. (In his autobiography, "Made in America: My Story," company founder Sam Walton acknowledged this problem.) A Resident Assistant program is intended to promote women and other employees who cannot relocate their families but wish to enter the ranks of management.

When asked by Sellers about this program in a deposition, Wal-Mart boss Coughlin said he believed it was a dead end and hadn't helped to promote a single employee.

Susan Phillips, international vice president of the Washington, D.C.-based United Food and Commercial Workers Union, and director of its Working Women's department, says if Wal-Mart doesn't start treating female workers better, female consumers may take notice. (The union has been trying for several years to organize Wal-Mart workers. No Wal-Mart workers currently belong to a union.) "Women spend about 90 percent of consumer dollars," she says. The National Organization of Women last year gave its "Merchant of Shame" award to Wal-Mart and urges consumers to shun the company.

Ellen Rosen, a Brandeis University professor of women's studies and author of "Making Sweatshops: The Globalization of the U.S. Apparel Industry" is now writing about Wal-Mart and female workers. She sees a connection between conditions in overseas factories where Wal-Mart clothing is made--and where most of the workers are women--and those of women working in its U.S. stores.

"To promote the bottom line at the home office," she says, Wal-Mart relies on "women workers, who are paid a 'women's wage.' This may be leading to a new kind of globally sanctioned gender discrimination."

Liza Featherstone is the author of "This Woman’s Work: Poverty, Discrimination, and the Nation’s Largest Private Employer," a book about sex discrimination at Wal-Mart, which will be published by Basic Books in late 2004.